When we look at the system design of western union we see high similarities with the typical electronic fund transfer used in banking sector.

One of the features of the system that distinguishes it from EFT is host to host transmission. In the places where coverage does not exist , since Western Union has agreements with private banks the system can use their networks and conclude the transaction.

33Database Management 34

Another feaure that seperates Western Union from EFT system is if the transaction is money transfer then by using this network W.U can provide instant transmission without any waiting time.

We can refer to two systems Batch Processing and Real Time Processing while explaining insant transmission.

35Batch Processing

A batch system involves the transmission or processing of a group of funds transfer instructions at single point in time.

36Real Time Processing

In a real time system, the transmission and processing of payment instructions takes place payment by payment at the time each payment is initiated. Information pertaining to incoming and outgoing instructions is thus available continuously. Western Union uses real time processing system.

37

There are two different banking financial intuition designs.

1.Net Settlement Design

2.Gross Settlement Design

38Net Settlement Design

In this system, banks send information related to individual payments to a single location, the so-called clearing house. The banks participating in the clearing house agree not to settle for each individual payment immediately trough interbank funds transfers, but their claims and obligations accumulate over a certain period and to offset incoming and outgoing payments. Banks then transfer only the value of their net obligation to the clearing house at a designated settlement time at the end of the clearing cycle.

39Gross Settlement Design

With Gross Settlement payment, messages are exchanged between each pair of banks , resulting a large number of communication channels. Banks settle each and every payment individually trough fund transfers.

40

Each money transfer is protected by Western Union safety system, recognized worldwide and can be located with a control number, thus ensuring the payment of the money you sent, quickly, only to the receiver.

41Encryption

A process of distinguishing a message in such a way as to hide its substance.

A process of creating secret writing.

Essential to creating a secure environment for digital money.

A way to make sure that no one else can effect the message, that no one can interpret and read the message, modify it or substitute another message.

42

Plaintext ? Ciphertext ? Plaintext

encrypt decrypt

Figure Encryption and decryption

ATMs also use encryption for security

The unencrypted message is called the plaintext. Once encrypted, the message is called ciphertext. The ciphertext of the PIN number and your request for cash is sent to your bank. In fact, encryption is half the process Turning ciphertext back into plaintext is called decryption. The bank decrypts the message containing your PIN number.

43 Encryption and decryption allows keeping message secure, of creating secret writing, which is called cryptography. The branch of mathematics that embodies cryptography are practiced by cryptologists, who are nearly all mathematicians because ciphers are all based on extremely difficult mathematical problems and number theories. To gain the trust and loyalty of its customers, a business must be able to guarantee that sensitive personal and financial information about them is not accessible to outside parties. 44The encryption system upholds these principles

identification

authentication

nonrepudiation

verification

privacy

45 Identification Authentication

Identification is the process verifying that the sender of a message truly is who they are stated to be. Need for identification is fulfilled by a PIN number or a password.

Authentication is the process of verifying the true sender of a ciphertext and verifying that the text of message itself has not been altered. Authentication requires digital signatures, if a single byte of the digitally signed message has been altered, the decryption process will reveal that alteration.

46 Verification Nonrepudiation

Verification is the ability to positively identify and authenticate a particular encrypted communication. Both must be true before a message can be trusted completely.

Nonrepudiation is the quality of the secure system that prevents anyone from denying that they sent certain files or data, when in fact they did.

47Privacy

Privacy is the protection of sensitive and personal information from unintentional and intentional attacks and disclosure.Strong cryptosystems provide more privacy than weak cryptosystems.

48Western Union uses 2 encryption methods

DES (Private key cryptography)

RSA (Public key cryptography)

49DES

Data Encryption Standard which is a secret-key system is based on secrecy of its encryption algorithm but not on the secrecy of the key used to encrypt a given message. Encryption with DES is known as secret-key or symmetric-key cryptography, since the same secret key must be used to encrypt and decrypt a message by the sender and the receiver.

50RSA

Plaintext ? Ciphertext ? Plaintext

encrypt decrypt

key key

Figure DES encryption and decryption use the same (secret) key.

It is based on the notion that cryptographic keys can come in pairs and that one key cannot be derived from the other. One key of pair is used to encrypt a message, the other to decrypt, only that specific key of the pair decrypts a message encrypted by its complementary key.

51RSA allows two functions that DES does not provide

secure key exchange without prior exchange of secrets

digital signatures

These two encryption methods complement each other perfectly

RSA has the advantage of potential for increased security since the private half of the key pair need not be transmitted or revealed to anyone.

DES has the advantage of being much faster that RSA and well suited for encrypting large sets of data.

The DES encrypted message and the RSA encrypted DES key are sent together as secure digital envelope.

Figure Digital envelope

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